Why prioritize the workforce when pursuing transactions?
We’re operating in an environment where nearly half of employees say they’re likely to leave their employer in the next year. Competition for good talent is fierce and burnout is high. And although 90% of employers believe they prioritize employees for long-term value creation when making decisions, only 69% of employees agree Put that data into the context of a possible transaction, and the numbers become even more poignant. Most employees aren’t involved in exploring, pursuing or closing deals. Mergers and acquisitions tend to take shape confidentially and are discussed at a high level. Yet for any deal to succeed, you cannot afford to lose out on the knowledge and skills those very same employees represent. They bring market access, sales expertise, customer relationships, innovative ideas and so much more. Put simply: the people are the value you want to realize by closing a deal.
But employees who haven’t been close to the M&A process may feel nervous, fearful, uncertain or stressed. Left to implement a strategic or board-level decision they didn’t have a chance to influence, employees playing catch up in real time may struggle to deliver on value creation anticipated by leaders who designed the transaction in the first place.
There’s no two ways about it: the humans expected to lead, adopt and embrace deal-driven change should sit prominently at the centre of transaction implementation plans to generate the best possible chance of creating sustainable, post-deal value over the long term.
So how do you put humans at the centre of the value proposition to make deals a success?
1. Lead authentically. It’s human nature to expect the worst. Without the right leadership, voluntary departures or a lack of engagement — and thus productivity — can slowly but surely eat up deal value. When people are left guessing as to the future, they pay less attention to the business and productivity lags, and that derails success. Aligning authentic leadership effectively with the human reality can help.
How?
- Carve time out to engage with people sooner rather than later. There’s not often a lot of time between signing a letter of intent and closing a deal. This doesn’t give you a lot of room to engage a workforce in what has likely been a highly confidential negotiation process. Chances are you won’t have worked out the details that relate to most of the workforce by deal close, either. That means you should build in a tremendous focus on people as early as you possibly can.
- Dedicate resources and clear ownership over managing and engaging the workforce at the earliest possible opportunity.
- Prioritize people in strategic plans as soon as negotiations begin. This helps ensure you’re ready to hit the ground running with fulsome tactics once it’s feasible to speak publicly with the workforce on both sides of the transaction.
2. Retain thoughtfully. Robust and impactful retention plans get underway by understanding what capabilities the company requires, particularly during the uncertain times that surround deal close. Focusing on capabilities — read teams, not individuals — can reveal important networks and chains of activities required to keep the business running well. That’s different from drilling down into a single role, which may or may not reflect the big-picture view of what it takes for the business to succeed overall. Building comprehensive retention plans in this way helps you avoid missteps and keeps a focus on priorities — having the right skillsets and perspectives on board to take the business to the next level.
How?
- Address retention plans early in the deal process, with the seller and buyer agreeing to an overarching joint program.
- Think beyond deal close. Retention plans that simply get people to deal close are often derailed by folks collecting incentive packages, and swiftly moving on. Thinking further out to protect and sustain the workforce in the months following deal close can show people you’re aligned to their priorities and help engage them in a compelling value proposition.
- Show a viable path forward. Retention plans should go beyond incentivizing the workforce to really illustrate what the future — and their future — can look like. This encourages people to stick around and gives them a purposeful employer value proposition to believe in, something we know is important to employees today.
3. Engage deeply. Psychological safety is paramount when successfully managing expectations through deal close. Folks should feel reassured, and also free to ask questions and raise concerns. Hopefully, this is already engrained in your culture. If that’s the case, build on it; where there are cracks in psychological safety, invest now. With reassurance as the foundation, you can engage management and staff in the upsides. Above all? Balance reassurance with engagement.
How?
- Put humans at the heart of a comprehensive change management and communication plan. Hone these key messages. Help people understand what’s in it for them — whether that’s new pathways to career growth, more benefits, opportunities for mobility or flexibility, or anything else in between.
- Create a push-pull environment that cultivates dialogue with the workforce and opportunities for two-way conversations. Lay out the tough questions people will ask, and answer them honestly. If you don’t know the answer yet, that’s okay. Transparency builds relationships, too.
- Put mechanisms in place to create forums through which people can influence change, share ideas and contribute to the process. Creating an environment where deals flourish requires change agents to help make it so. Moving from vision to reality requires a powerful “beyond change network.” This helps bring people along, influence one another, generate discussion and surface ideas from the people who know operations best to help the deal, and the organization, succeed.
